The COVID-19 pandemic and Russia’s invasion of Ukraine have in recent years presented many business leaders with difficult choices and short timelines on which to make important decisions with plenty of possible repercussions down the line. Organizations that allow for an active dialogue about their strategic priorities can make better choices in such turbulent times, says Harlow Cohen, a professor of organizational behavior and the faculty director for the Weatherhead School of Management master’s program in Positive Organization Development & Change at Case Western Reserve University.
A former consulting and operations executive who joined Case Western’s faculty in 2005, Cohen recently talked to IndustryWeek about making good strategic choices while the dust swirls, one of the possible repercussions of the Great Resignation, and more. Here are some excerpts from the conversation, lightly edited for clarity and brevity.
With the events of recent years and the rapid news flow all around us, are fundamental changes actually happening more quickly? Or does it merely feel that way?
It’s not a common question, but it’s one that does get asked once in a while. You might go to a conference and hear an executive say that the amount of change in the market is unprecedented. But with the number of times “unprecedented” has been used during the pandemic, I joke with my students that if I hear that phrase a few more times, I’ll vomit.
Part of the answer to the question depends on the industry and the stage of evolution in which that industry is traveling. If you’re making candy bars or cardboard boxes, you’re in a relatively stable environment versus that of software development—which often has the lifespan of a fruit fly. But even in industries that going through changes today, it’s important to understand that the change has been unfolding for many years.
But when a dominant model takes hold and everybody else is rushing to confirm or mimic whatever that model appears to be, it appears as though the change is unfolding more quickly in the latter stages of such a cycle. But that doesn’t mean the change didn’t start years ago. Look at the steel industry and the rise of mini mills, the idea of which has been around a long time. It wasn’t until integrated mills began going out of business that mini mills became adopted more broadly.
With our collective ability through social media and other tools to know what’s going on in near-real time, how should leaders distinguish between data points to simply take into account versus items they should actually react to in a strategic sense?
That’s a great point. The dissemination of information is nearly instantaneous these days which creates overnight a level playing field. So to people asking if they can create an advantage based on the information they have, the answer is, ‘Not anymore.’ And that reinforces the importance of figuring out what your competitive advantage will be. [Michael] Porter has been talking about this for nearly 50 years: How can you make your value proposition distinctive and able to not erode over time?
This is why senior management needs to have conversations about this on an ongoing basis rather than doing it in the fourth quarter and checking that box. I don’t think management teams devote the time needed on this versus paying attention to operations. The challenge is not to treat strategic planning as a marathon session, not to dedicate to it three days in December. An ongoing discussion allows the leadership team to make incremental changes along the way rather than have to make wholesale or system-wide changes in a shorter time frame.
The education sector is running into this now. There’s a shakeout coming and 300 to 500 colleges and universities will likely close their doors in the coming years. That’s a result of not making wholesale changes in reaction to the market.
On the topic of making changes: Businesses all over the world have been adjusting to the pandemic and its supply chain shocks and now Russia’s invasion of Ukraine. At what point do operational decisions such as those open the door to or actually become strategic conversations?
I’m part of an executive education program and a course I teach there is on decision-making. It uses a simulation comprising 18 decision-making scenarios. And one question I look to answer out of that is why some teams score better than others. What are they doing differently?
A key thing I’ve found is based around the idea of broad framing versus narrow framing. The first thing high-performing teams do in the exercise is clarify the strategic rationale on which all of it is based. Do they adhere to the proposition described for them on the first page of the simulation or do they depart from it? Having decided that, they then work through the 18 items.
The teams that treat every scenario as if it’s a stand-alone, binary problem do worse on the simulation. The teams that look across the scenarios and keep track of what needs to be consistent between them do better. So take that into the real world: Companies face hundreds of challenges during the course of a year. If a management squad treats each of those as a standalone issue without accounting for the others, the potential for cognitive errors and biases increases.
Human beings pretty much stink at making decisions! But [Daniel] Kahneman’s ideas on thinking fast and slow are so important. And if you look at decisions together under a framework, it starts to move you in a strategic direction.
The major events of recent years have shown that, right? A number of businesses have taken the opportunity to re-examine their strategies in light of needing to make a lot of important individual decisions.
Yes. Between epidemics, pandemics, climate change and more, we’re beginning to see that these events are more connected than we maybe understood them to be. […] And developing the ability to think strategically requires lots of deliberate practice–and not necessarily on simulated activities but on real activities.
On the idea of managing change: I think there’s a fallacy that people think they can buy programmatic approaches and plug them into organizations. Implementation is the weak sister of strategic thinking and the ability to formulate strategy. To me, that seems like the weak spot.
Very few organizations have the capacity to absorb large-scale changes, especially ones that can be fraught with cognitive errors and biases or motivated reasoning that compromise effective decision-making. This challenge is compounded by the Great Resignation because the loss of key people strips the organization of its ‘genetic memory,’ the in-depth knowledge housed in people that is accumulated from years of first-hand experience who understand critical nuances and who are the very ones that make the difference between effective and ineffective implementation.
